“Sizeable headwinds remain” for recovery of outbound overseas tourism from China “in 2024 and possibly 2025,” says a report from banking group Nomura.
The institution added in its Monday memo that “supply-side constraints” had “eased,” in terms of things such as volume of available flights and their cost, and the availability of exit visas for Chinese.
But the weakness of China’s currency the yuan relative to some other major currencies; the condition of the domestic economy; “stagnated” income growth; and high youth unemployment, meant that the “demand side” drag on Chinese consumers’ appetite for outbound travel, was “now starting to kick in”.
Nomura said in its Monday report it expected Chinese passengers “carried by cross-border flights to recover to 73 percent of 2019 levels by the end of 2024 from the current level of 57.9 percent (November 2023), averaging 67 percent [recovery] for full-year 2024”.
The banking group nonetheless said it anticipated that spending by outbound Chinese tourists would “fully recover to 100 percent of 2019 levels for full-year 2024”.
Chinese tourists made 155 million overseas visits in 2019, spending US$255 billion, indicated data from the China Tourism Academy and the United Nations World Tourism Organization (UNWTO), as reported by China Daily.
In its assessment for the state of outbound tourism recovery from China, Nomura thought it “worth highlighting that, for both international flights and passengers carried by these flights, we still do not expect them to fully recover until 2025”.
In November Nomura had stated it had a “more cautious view on China’s economic performance” than previously, which it added was consistent with recent data for outbound tourism from China to regional destinations including the casino jurisdiction of Singapore, and also for Thailand, another usually-popular place with Chinese.
In its Monday report, Nomura stated regarding outbound air services from China to regional destinations, referring to a club of Southeast Asia nations: “In general, the recovery of international flights to ASEAN countries has been poor over the past two months.”
Nomura added: “On average, flights to the ASEAN-6 (Singapore, Malaysia, the Philippines, Thailand, Vietnam and Indonesia) have recovered to only 58.1 percent of 2019 levels in December, up very marginally from the 56.0 percent in October.”
Though the banking group observed regarding the city-state of Singapore, which has a casino duopoly: “Singapore remains the best performing ASEAN nation in terms of flights from China, with its recovery rate reaching 81.6 percent of 2019 levels in December, up further from 78.2 percent in October.”
A number of other commentators has recently mentioned possible negative impact on the Asia-Pacific casino industry of any softness in the recovery of Chinese tourist volume, as well as the possible impact of China’s ongoing campaign against “cross-border gambling” by mainland residents.
Asia-Pacific casino jurisdictions have regarded Chinese tourists as an important target market, with many working to court such players in the pre-pandemic trading period up to 2019.
Separately in December, banking group Morgan Stanley expressed some caution on the economic benefit during 2024 of outbound Chinese tourism in the wider world. It also doesn’t expect China’s international air travel fully to recover to pre-pandemic levels until 2025, a view shared by Bloomberg Intelligence.
